Sanyo Elec. Co., Ltd. v. U.S.
| Decision Date | 04 June 1999 |
| Docket Number | Court No. 87-04-00620.,Slip Op. 99-49. |
| Citation | 86 F.Supp.2d 1232 |
| Parties | SANYO ELECTRIC CO., LTD. and Sanyo Electric Inc., Plaintiffs, v. The UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Sharretts, Paley, Carter & Blauvelt, P.C. (Gail T. Cumins and Ned H. Marshak), for plaintiffs.
David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director; Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, and Melanie A. Frank, Of Counsel, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant.
On April 6, 1998, this Court in Sanyo Electric Co. v. United States, 9 F.Supp.2d 688 (1998) (hereinafter "Sanyo I"), remanded to the Department of Commerce, International Trade Administration (hereinafter "Commerce" or "ITA"), several issues arising from the final results of the fourth administrative review entitled Television Receivers, Monochrome and Color, From Japan; Final Results of Antidumping Duty Administrative Review, 52 Fed. Reg. 8940 (1987) (hereinafter "Final Results").1 Specifically, the Court directed Commerce to reconsider 1) the determination of statutory foreign market value (hereinafter "FMV"); 2) Sanyo's level of trade adjustment; 3) the calculation of home market advertising expenses; and 4) the treatment of the commodity tax.
On August 14, 1998, Commerce released draft remand results (hereinafter "Draft Redetermination") and invited interested parties to comment. After receiving comments (hereinafter "Draft Comments") from Plaintiffs, Sanyo Electric Co., Ltd., and Sanyo Electric Inc. (hereinafter "Sanyo") on September 4, 1998, Commerce filed its Final Results of Redetermination Pursuant to Court Remand (1998) (hereinafter "Final Redetermination").
The Court has jurisdiction over these issues pursuant to 19 U.S.C. § 1516a(a)(2) (1988) and 28 U.S.C. § 1581 (1988).2
The complete factual background to this case is described in Sanyo I and familiarity with the prior case is presumed. Therefore, only facts relevant to the disposition of the case at bar will be discussed.
In Sanyo I the Court reviewed challenges to Commerce's investigation of television receivers, monochrome and color from Japan. See Final Results. The Court remanded to Commerce instructions to, inter alia,3 recalculate FMV4 based on the price paid to Sanyo from its distributors or to provide a rationale for calculating FMV based on the distributors' resale price to unrelated dealers and to reconsider the level of trade adjustment in conjunction with the foregoing. Sanyo, 9 F.Supp.2d at 698.
In the first three Periods of Review (hereinafter "POR"), Commerce calculated FMV on the basis of prices paid to Sanyo by both related and unrelated distributors having determined that the price paid by Sanyo's related distributors was made at arm's length. Commerce concluded the transactions were made at arm's length even though the number of sales to unrelated distributors was insubstantial.5 In the Fourth POR although sales made to unrelated distributors were similarly insubstantial, Commerce found that:
[o]f all sales to distributors in the fourth period, Sanyo had only one sale of one unit to an unrelated distributor at a price equal to its prices to related distributors. That sale was less than one percent of all such sales. We do not consider this sufficient to determine that sales to related distributors were made at arm's length and, accordingly, we base FMV on sales made by the related distributors to unrelated dealers.
Final Results, 52 Fed.Reg. at 8943. Although the government argued before the court in Sanyo I that Commerce's arm's length determination was made in conformity with Commerce's general practice, the government conceded that a remand was required so that Commerce could try to explain the inconsistent methodology applied between the first three PORs and the Fourth POR.
In the Final Redetermination, Commerce maintained that Sanyo's FMV calculation should be based on the distributors' prices to dealers and Sanyo, here, challenges Commerce's redetermination on that basis. Id. Accordingly, Sanyo seeks an order directing Commerce to recalculate FMV based on prices paid to its related distributors. In the alternative, should the Court affirm Commerce's calculation of FMV, Sanyo requests an order requiring Commerce to grant Sanyo's claimed level of trade adjustment.
The Standard Of Review For ITA Remand Redeterminations Requires Affirmation Unless A Redetermination is Unsupported By Substantial Record Evidence Or Otherwise Not In Accordance With Law.
"The court shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1) (1988). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).
Commerce's Decision To Use Prices Paid By Sanyo's Dealers to Distributors To Calculate FMV Is Supported By Substantial Evidence And In Accordance With Law.
In Sanyo I, the Court ordered Commerce to calculate FMV based on the price paid to Sanyo from its distributors or provide a rationale for calculating FMV based on the distributors resale price to dealers. The latter calculation was a departure from the methodology used in the prior three administrative reviews. In the Final Redetermination, Commerce maintained its decision to base FMV on the distributors resale price to dealers. Final Redetermination at 7. The ITA explained that its practice has been developed to reject "unrelated/unaffiliated sales if they are not commercially significant and therefore are insufficient to provide a meaningful comparison to related/affiliated party sales." Id. at 6.
Although Commerce conceded that the calculation represented a change in methodology,6 it explained that its new approach "is intended to prevent the manipulation of sales transactions to the respondent's advantage and to prevent the fabrication of sales." Id. at 5-6. Accordingly, for the Fourth POR, Commerce determined that Sanyo's Id. at 7.
Sanyo argues that Commerce's methodology is unsupported by substantial evidence and not in accordance with law and therefore, Commerce's decision requires reversal. Specifically, Sanyo argues that Commerce may not ignore relevant evidence of sales to unrelated distributors occurring prior to the Fourth POR. Sanyo also asserts that the "intertwining" of sales information for the Third and Fourth POR requires consideration of Third POR sales data. Finally, Sanyo claims that Commerce's determination to use a different methodology for calculating FMV in the Fourth POR placed a legally impossible burden on it as well as created an impermissible retroactive policy contrary to law. The Court will address each argument seriatim.
1.
Commerce's Decision Not to Consider Third POR Sales To Calculate FMV for the Fourth POR is Supported by Substantial Evidence and In Accordance With Law.
In the Final Redetermination, Commerce concluded that "Sanyo's reliance on sales data submitted for the third administrative review is not relevant to any demonstration of the arm's length nature of sales in the fourth administrative review." Final Redetermination at 15-16. For support, Commerce cites to Certain Welded Carbon Steel Pipe and Tube Products from Turkey, 55 Fed.Reg. 42230 (1990) for the proposition that "a respondent may not rely on data submitted in prior reviews to support a claimed adjustment in a current review." Final Redeterminations at 15. Consequently, Commerce refused to consider Sanyo's Third POR sales to unrelated distributors in calculating the number of unrelated sales required to fulfill the arm's length test in the Fourth POR.
Sanyo argues that Commerce erred by rejecting Third POR sales to unrelated distributors in its arm's length test. Specifically, Sanyo contends that the "PORs constitute arbitrary periods of time, unrelated to commercial dealings, selected because of the happenstance that an AD Order7 is published in a particular month." Comments of Sanyo Electric Co., Ltd and Sanyo Electric Inc. in Response to Redetermination Pursuant To Court Order In Slip Op. 98-41 at 8 ("Sanyo's Comments"). As a consequence, Sanyo's sale of 10 units to unrelated distributors made during the Third POR was sufficient to pass the arm's length test, while Sanyo's sale of 1 unit to an unrelated distributor during the Fourth POR resulted in Commerce's rejection of that sale for its arm's length test. Id. at 7 (citing Final Redetermination at 7) (Commerce "rejected the identical prices and the identical pricing practices as being `commercially insignificant.' "). Sanyo concludes that "the fact that the majority of Sanyo's sales to unrelated distributors had taken place prior to [Commerce's] Fourth POR does not detract from their relevance to [Commerce's] determination," id. at 7-8, and, therefore, Commerce acted contrary to law by ignoring relevant information.8
In addition, Sanyo argues that Commerce's conclusion that "there was no intertwining of the sales information for determinations made for each relevant review period," id. at 10, is in error. In fact, argues Sanyo, "clear and uncontradicted evidence of such `intertwining' is found in the following documents[:]"
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